If the unit cost of direct materials is $20, direct labor is $12, variable overhead is $2, avoidable fixed costs are $6,000, unavoidable fixed costs are $5,000 and sunk costs are $9,000, what is the total relevant cost for 300 products?
A)$15,200
B)$16,200
C)$24,200
D)$25,200

Question

Quizplus · Accepted Answer

Total variable cost per unit = $20 + $12 + $2 = $34
Total relevant cost for 300 products = 300 x $34 + $6,000 + $5,000 = $16,200.

Sunk costs ($9,000) and unavoidable fixed costs ($5,000) are not considered relevant costs because they cannot be changed by any decision made regarding production or sales. The avoidable fixed costs ($6,000) are relevant and should be included in the total relevant cost calculation.

If the Unit Cost of Direct Materials Is $20, Direct